IM Cannabis (IMCC) Q2 2024 earnings summary

Executive summary

• Q2 2024 marked a transformative period with German cannabis legalization driving a 200% sequential sales increase and a 129% year-over-year surge to $3.5M, now 24% of total revenue.

• Revenue grew 12% year-over-year to $14.8M, with strategic focus shifting to Germany and optimization of Israeli operations for premium segments.

• Operating expenses decreased 29% year-over-year to $3.7M due to restructuring and cost controls.

• Net loss narrowed slightly to $3.5M from $3.7M in Q2 2023.

• The planned reverse merger with Kadimastem was terminated to maintain focus on core cannabis operations amid changing market dynamics.

Financial highlights

• Q2 2024 revenue was $14.8M, up 12% year-over-year, driven by a 129% increase in German revenue.

• Average selling price per gram rose 21% year-over-year to $6.09.

• Gross profit fell to $0.8M (down 75.6% year-over-year), with gross margin at 6% due to inventory clearance and accruals.

• Adjusted EBITDA loss was $2.3M, compared to a loss of $0.5M in Q2 2023.

• Cash and cash equivalents at quarter-end were $0.7M, down from $1.8M at year-end 2023.

Outlook and guidance

• Continued focus on German market growth, with new supply channels from Israel and exclusive premium product launches planned.

• Management expects gross margins to improve in future quarters as inventory issues are resolved.

• German gross margins currently around 40%, but price compression is anticipated as the market matures.

• Company remains focused on Israel and Germany as core markets, having exited Canada.